Once Again: The Number Of Patents You Hold Does Not Equal How Much Innovation You've Done

from the please-stop-that-myth dept

We've complained in the past when companies, the press and analysts try to use number of patents as a "proxy" for innovation. It's quite misleading -- and various studies have made that clear. You can have tremendous innovation without patents, and you can have tons of patents, without any real innovation. Yet, as reader Nick points out, a report looking at the alternative energy auto space dings Ford for "lagging" in "the alternative energy race" because it doesn't have as many patents as others.

This is a real shame, because we've discussed before how the massive patent thickets in the hybrid car space have been holding back innovation and development in that space. In fact, Ford had a big tussle with Toyota a few years back after Toyota sued Ford and the two companies wasted tons of money and time in court, until the court finally pointed out that Ford did not infringe. On top of that, Ford has been one of the earlier adopters of hybrid offerings and remains the third largest hybrid seller after Toyota and Honda. So, claiming that it's somehow "lagging" because of fewer patents is quite misleading.

Reader Comments

In my former role as an engineer, I knew the things I and others received patents for. The company gave us cash rewards for each patent they gained, so the incentive was to patent as many unique approaches as possible, even when they were the only few options anyone could take.

I always thought it was great that Jack Kilby, the inventor of the integrated circuit, said that if he hadn't thought of it when he did, someone else would've. It was just chance that he was the first.

the press and analysts try to use number of patents as a "proxy" for innovation.

Innovation is just that, innovation.

Mike, on a number of occasions you have pushed the idea that incremental improvements over existing designs (often copyright or patent processes) is in itself innovation. Under that standard, collecting two innovations together that might somehow benefit from each other and then working with it should be considered innovative. If the end result of having all of these patents together in a single place creates even an iota of advancement, there has been innovation.

Unless of course you want to change you stand on the subject. It would appear right now that you are hedging your guru status by putting out points that conflict, such that you can point at either of them later and be "right".

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Your quote on Dean Kamen:

"He's someone who believes in the "big bang" theories of innovation rather than recognizing the importance of it being an ongoing process. Those who recognize the ongoing process are the ones who succeed in the market."

and on advancement:

"Once again, we've actually shown numerous bits of research that have shown that the "a-ha" moment is mostly a myth. Not entirely, of course -- it has happened. But nearly all innovation comes out of a general advancement in knowledge, done in collaboration with groups."

One removing patents to speed "innovation":

"Again, if that actually happened, you'd have a point. Except it didn't. Why? Because actual competition drives innovation. Just duplicating a product gets you nowhere. You need to be better. So the more competition, the MORE INNOVATION because everyone keeps trying to one-up each other. The pace of innovation is FASTER in societies without patents."

Three interesting quotes, I think the last one says it best as everyone attempt to "one-up each other", which is often just changing the color of something, or adding another useless doo-dah to an existing product.

My point is this: If a patent holder has multiple patents in the same field, and connects those patents into a usable product, they are innovating. Even if the advancement is microscopic, there is advancement and thus innovation.

Your claim is that patents stifle innovation. Yet Ford (and for that matter honda and toyota) each managed to develop hybrid systems that don't infringe on each other's work, giving humanity not one but in fact three different and workable solutions to one of the more signficant issues that faces mankind. Would you not say that innovation has occurred?

Would you not also agree that having multiple patents in the same field grouped together might also lead to innovation by the patent holder? Rather than different companies attempting to cross license (or not) one company collects a series of patents, puts them together, and develops an innovative product based on them?

Would you think that this innovation would happen if there wasn't a "risk / reward" system in place that allows people to aggressively invest in developing new ideas for market?

Based on the Toyota / Honda / Ford situation, it would appear clear that patents have created a situation where multiple solutions and multiple paths have been explored, and each has been given it's chance to recover it's costs in the market place. Isn't that advancing mankind?

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Actually....

All that could have been done, and I'm pretty sure it would have been, even if there were no patents. Patents, I believe Mike is saying, isn't the be-all end-all to display what you've done to innovate anything.
Actually showing people your product is what it takes.
Yes you make valid points about what has happened sometimes, but to say it was BECAUSE of patents is false.

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Yes you make valid points about what has happened sometimes, but to say it was BECAUSE of patents is false.

Without patents, would Ford and Toyota just followed down the road Honda started down originally? Would we be seeing the refining (one-uppping) of each other down a single, narrow path? What would happen if that path turned out to be the wrong one?

In this case (and many others) patents have encouraged companies and individuals to look down entirely different routes to get to a solution, and as a result, we have multiple promising leads in this area.

It isn't clear that eliminating patents would have created real innovation in these areas. In fact, Mike's opinions (such as with the Netflix prize) would suggest that one model would have been selected and all of the companies would be refining that one model. Maybe we would have more aggregate output of hybrid or electric cars today, but in the long run, having multiple options bodes very well for the industry as a whole.

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Like I said, You've made very valid points and continue to do so. Also, don't get me wrong on my stance on patents, I DO believe they have their place and importance. But to blindly say that the more patents I hold the more innovation I have made in anything.
Let me put it this way. I do research on "widgets". A completely new never before seen thinga-mabob. I apply for patents and am granted 13.
The widget is something that SOMEBODY should have come up with years ago (actually surprised nobody saw the opening before me) as it makes driving a nail easier.

Here's where patents go horribly wrong:
I NEVER produce my product, and just sit on my patents.
Now you come along and look at that nail half sticking out of that bit wood and come up with an idea on how to drive nails better. UNFORTUNATELY for you, it was the same no-brainer I came up with and was awarded patents for 5 years ago.
With MY patents I now sue you in court for copying my "innovation" to make yourself money.

Long way of getting here I think but here goes.
Innovation on paper is not really innovation at all. You come up with something but It never gets to me to make my life better, easier, different, how is it innovation.

Patents followed by product? Yes innovation. "I have 13 patents but have only put 2 of them to use in actual products"? Not so much.

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Or I go back to the drawing board and come up with another way, or hold onto the great idea until your patent runs out and call it even. Heck, I might even reward you and buy your patent out.

13 patents on new ideas are still innovation. Maybe 11 of them are not marketable right now, maybe in a few years. It doesn't make it any less of an accomplishment or advancement to get there first. It also doesn't stop others from taking a different solution to solve the same problem. In fact, by publishing a patent, you are often giving others the kick start to look for alternatives.

It isn't like the information is secret or anything!

The other part is this: patents are 17 to 20 years (less on design patents). In the reality of mankind, and not our own selfish view of time, 20 years isn't long. Heck, in the automotive business, it can take 5 to 7 years to being a regular car to market. I would suspect that many of the hybrid cars we are seeing today were started 10 years ago or longer. So even the dumbest company sitting on the sideline could start today, use 10 years to develop based on other's patents, and come out with a patent free car just when their development cycle is done.

Hmmm. Time. A limiting factor for individual humans, not so much for mankind.

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"Without patents, would Ford and Toyota just followed down the road Honda started down originally?"

Without patents, they would have been free to improve upon Honda's path without interference. In the current thicket of patent monopolies, we become entirely dependent on Honda to improve that path, even if another company can do better.

If Honda didn't show an obviously optimal path, the natural tendency would be to experiment with a different path, in order to establish brand differentiation, which is a much bigger driver of "parallel" invention than patents ever were.

"Would we be seeing the refining (one-uppping) of each other down a single, narrow path?"

No, because they would be competing using all available options, rather than depending on their own little areas of patent hegemony. The assumption that one path is the most profitable is your own assumption, and not based in reality at all. A valid business assumption tends toward either path differentiation, or faster improvement along the most fruitful path for a given company's current circumstances, which might vary widely from that of all other competitors. The usefulness or profit potential of any invention depends a great deal on its unique market context.

"What would happen if that path turned out to be the wrong one?"

Then a newer or more nimble competitor is free to come in and take all the market share with the "right" path. The patent thicket is their main roadblock, currently.

The assumption that any of these hypothetical scenarios is helped by patent monopolies at all is ridiculous. Competition is intrinsically stifled by monopolies of all forms, so all these scenarios would benefit from the abolition of patents.

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"Without patents, would Ford and Toyota just followed down the road Honda started down originally?"

Without patents, they would have been free to improve upon Honda's path without interference. In the current thicket of patent monopolies, we become entirely dependent on Honda to improve that path, even if another company can do better.

You never answered the original question, you ignored it. The question is valid. Yes, other companies might have been free to "improve" on Honda's approach to patents, but with the three or four versions of hybrids that exist, if patents had not forced the options, we could be "incrementally improving" the lest optimum version, and we might never have known that version was the least optimum.

The other point you fail to address, and important one, is that two or three of the approaches ARE NOT COVERED BY PATENTS, SO ANYONE IS FREE TO "IMPROVE THEM" TO THEIR HEART"S CONTENT. In spite of freedom to "improve" the unpatented versions, new versions are being created. Hmmm...imagine that.

If Honda didn't show an obviously optimal path, the natural tendency would be to experiment with a different path, in order to establish brand differentiation, which is a much bigger driver of "parallel" invention than patents ever were.

Wait a moment. Why would anyone spend billions just for brand differentiation? I could see millions, maybe, but billions have been invested in hybrid development to come up with better systems. Of course, the billions are invested knowing that if a better system is invented that there will be an opportunity for payback. There is no "natural" drive to spend huge sums of money with an uncertain outcome.

"Would we be seeing the refining (one-uppping) of each other down a single, narrow path?"

No, because they would be competing using all available options, rather than depending on their own little areas of patent hegemony. The assumption that one path is the most profitable is your own assumption, and not based in reality at all. A valid business assumption tends toward either path differentiation, or faster improvement along the most fruitful path for a given company's current circumstances, which might vary widely from that of all other competitors. The usefulness or profit potential of any invention depends a great deal on its unique market context.

But, if we only had the Honda version of the hybrid, then that would be the only available option. Your statement assumes facts no in evidence, unless you assume the existence of patents, of course.

"What would happen if that path turned out to be the wrong one?"

Then a newer or more nimble competitor is free to come in and take all the market share with the "right" path. The patent thicket is their main roadblock, currently.

Not really. If a "newer" or supposedly "more nimble" competitor really came up with something better, though I am unable to fathom why they would spend billions to do so, whoever has the better marketing and distribution department is the one that will win, copying the better invention of the two.

The assumption that any of these hypothetical scenarios is helped by patent monopolies at all is ridiculous.

No, you assumption that patent monopolies are no help is not only ridiculous, but has been proven wrong in by the analysis of people against patents, who find that certain indistries have in fact seen positive benefits by the presence of patents.

Competition is intrinsically stifled by monopolies of all forms, so all these scenarios would benefit from the abolition of patents.

*Sigh* If you repeat this long enough, maybe it will happen. There was recently a paper showing that a completely unfetter market is actually not as efficient as a market with some constraints. The question is not whether constraints in the market place are valuable, the question is how much constraint is optimal.

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Another interesting point...Toyota is current the hybrid leader, and, coincidentally(?), they have the most hybrid patents. Honda appears to be the second largest seller of hybrids and they, also coincidentally(?), have the second most hybrid patents. I am unsure of who has the third largest portfolio of hybrid patents. I think it is Ford, who I believe has the third largest hybrid sales.

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I have no idea what you are talking about. The numbers are readily available with just a minimum of searching at USPTO.gov. I have no idea the point you are trying to make about Ford. You will note that I said I did not know who has the third largest portfolio of hybrid patents. I suggested it might be Ford. Now, would you like to clarify your point about Ford?

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"Your claim is that patents stifle innovation. Yet Ford (and for that matter honda and toyota) each managed to develop hybrid systems that don't infringe on each other's work, giving humanity not one but in fact three different and workable solutions to one of the more signficant issues that faces mankind. Would you not say that innovation has occurred?"

I don't see how your hybrid example demonstrates patents encouraging innovation at all. It could have been that innovation happened in spite of the patents.

But you're casting this as an all-or-nothing thing, which I don't think it is. Patents have a role if they're done properly. The problem is that they aren't being done properly.

Patents as they are being used in the US clearly hamper innovation, at least in my field, software. It is literally impossible to write any significant piece of software without stepping on a few patents. Not because of lack of innovation, but because patents have been granted for things that by the patent laws themselves should never be granted, then are used to profit from other people's innovations rather than allowing the patent holders to innovate.

The patent system is broken, period, and in its current form it is damaging to innovation and society in general. this doesn't mean that patents should be done away with as a concept, it means the patent system needs to be fixed so that it can accomplish the purpose for which it exists.

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"Your claim is that patents stifle innovation. Yet Ford (and for that matter honda and toyota) each managed to develop hybrid systems that don't infringe on each other's work, giving humanity not one but in fact three different and workable solutions to one of the more signficant issues that faces mankind. Would you not say that innovation has occurred?"

I don't see how your hybrid example demonstrates patents encouraging innovation at all. It could have been that innovation happened in spite of the patents.

It could have been that business would have developed to the degree it has without money. It is possible that cooking would be as far advanced as it is without spices. However, money was in fact a huge advance for business. Spices did advance cooking tremendously. Can innovation happen without patents? Of course. No one ever said innovation requires patents. The question is whether more innovation happens than without. While it appears unquestioned that there appear to be a few industries where patent slow innovation (though the exponential growth in innovation makes it hard to prove that to be the case), there are also a number of industries that seem to benefit strongly from patents.

But you're casting this as an all-or-nothing thing, which I don't think it is. Patents have a role if they're done properly.

Yes, absolutely.

The problem is that they aren't being done properly.

I disagree. The bigger problem is that the teeny percent of patents that end up involved in lawsuits (abour 1 to 2%), make the remaining 98% or 99% look bad.

Patents as they are being used in the US clearly hamper innovation, at least in my field, software.

I agree that there is evidence to support this statement. It is quite possible that the Supreme Court will help fix or clarify this issue in the Bilski suit.

It is literally impossible to write any significant piece of software without stepping on a few patents.

I am curious. How do tens of thousands of significant pieces of software continue to get produced?

The patent system is broken, period, and in its current form it is damaging to innovation and society in general. this doesn't mean that patents should be done away with as a concept, it means the patent system needs to be fixed so that it can accomplish the purpose for which it exists.

As I noted before, I disagree. Roughly 98% of all patents are never involved in a litigation. How does that make the system "broken"? I could see a claim of "broken" if you could prove that even 5% of patents are being abused or are "stifling" innovation, but there is no evidence of that - at least, not that I have seen. The system needs adjusted, but "broken," that is a mis-characterization.

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"the idea that incremental improvements over existing designs (often copyright or patent processes) is in itself innovation."

Wrong. Patent processes do NOT represent innovation. There are many "patent trolls" who manage to patent obvious incremental changes (and then do nothing to bring a product to market) and thus hinder the actual innovators. Look at today's Microsoft/sudo article for a great example of how existing ideas can be passed off as "innovations" in this way. Patenting can also hinder competitors working in the same area, especially when obvious ideas are patented.

The point is obvious - patents do not necessarily represent innovation nor work that will bring improved products to market. Therefore, they are a flawed metric.

Don't Blame Patents for the Automobile Industry

Well-grounded patents are not very relevant to the automobile industry, and the auto industry is made up of huge firms which have little difficulty in managing patent suits, but which are equally impervious to new ideas. Put crudely, the patent system only damages healthy prey, because it attacks growth, and the automobile industry isn't healthy enough to be seriously harmed by it. There is a whole body of unimplemented invention in the automobile industry, going back at least fifty years, and probably longer. The automobile industry is not an industry which reduces basic improvements to practice, save under extreme pressure-- that is what it comes down to. A custom car, say a Formula One racer, might cost a couple of million dollars to build, paying the skilled craftsmen and all. To introduce a new production car costs a couple of _billion_ dollars or more, what with all the special tools required for assembly line practice, in order to get the price down to twenty thousand dollars. Very often, the auto industry cannot do things because it hasn't got the money. The limiting factors tend not to have a whole lot to do with the design of the automobile-- they have a lot to do with the will to build new factories, with new robots.

In particular, the automobile industry tends to view engines and power trains rather like tires. An automobiles has to have tires, but you can buy a perfectly adequate tire from a third party without getting involved in designing or manufacturing tires. The automobile is simply not allowed to go fast enough to reveal the differences between a good tire and a not-so-good tire. In any case, there are traffic jams which make speed irrelevant. Similarly, it is not politically feasible to institute a serious gasoline tax, say five or ten dollars per gallon, so the automobile industry is not inclined to go very far on fuel economy or alternative energy. All kinds of other desirable qualities don't count for much either. Extreme durability doesn't get you very many points with a customer who expects to sell the car for a small fraction of its price after three or four years, and buy a new one, as a visible demonstration that he can afford a new car.

Another point is that the automobile is only half of a transportation system. The other half of the system is the road. Once a road is in place, it tends to become impossible to add lanes because people have built houses and businesses beside the road. Even if some parts of the road can be widened, the narrow parts are the choke points. The people who own the road, state and local governments, to the extent that they are at all entrepreneurial, are investing in public transportation, in commuter rail (which is very often electrified). From their point of view, that is the only possible choice. The centerline of a freeway is often a good place to run commuter trains, and as these expand, they will inevitably take up automobile lanes. Traffic jams are not going to go away. The best the automakers can hope for is that state and local governments will simply not do much of anything. The worst possibility is: "Automakers of the world, you are afraid of us because you think we intend to take away your freeway lanes. Well, rest assured! That is exactly what we intend to do!"

The automobile industry's chosen strategy is to treat automobiles as a form of "bling" jewelry. This is inevitable, given the basic limitations on the automobile's primary function.